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The Good, the Bad and the Notorious: risk differentiation in German third party motor insurance

Dr Reimund Schwarze
Deutsches Institut fur Wirtscharftsforschung, Berlin
Email: rschwarze@diw.de| 

Date
: Tuesday 1 June 2004
Time
: 1:00pm - 2:30pm
Venue
: CARR Seminar Room, H615

Abstract

This seminar talk discusses recent developments in third party liability insurance for motor vehicles. Specifically, it evaluates the preventive effects at the firm level of a variety of risk classification measures such as vehicle age, single driver bonus, garage holding etc. These new tariff criteria had been introduced in Germany in 1994 following the European third motor vehicle insurance directive. Based on ten years' observation little improvement can be found. This talk also considers the potential of using performance-related tariff criteria such as penalty points to improve the preventive effects of risk classification in this field.

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